Oil gains after DOE draw

Summary:

• DOE crude oil inventories: -2.6M vs -0.7M exp

• Production remains unchanged at 11.0 mbpd

• Oil adds to earlier gains and looks to break higher

The latest weekly crude inventory figures from the US have produced their usual high level of volatility in the Oil price in the immediate aftermath, but as the dust settles the market seems to be looking to move higher with both OIL and Oil.WTI sitting on decent gains for the day. The headline reading of -2.6M below the -0.7M consensus forecast, and also lower than the 0.0M seen in last night’s API release.

While it is not as far negative as last week’s -5.8M it does represent a larger than expected drop and also means that 3 of the past 4 releases have been sub-zero. The report itself was pretty positive for price on the whole with the following showing components in the form of actual vs expected unless otherwise stated:

• Gasoline: -1.6M vs 0

• Distillates: -0.8M vs +1.7M

• Production unchanged at 11.0 mbpd

The first move in the market was higher as one would expect, given the draw but it has been a bit choppy since. The Oil.WTI price spiked to 69.50 in the minutes that followed but since the H1 candle following the release actually closed red. However, the current candle is showing gains once more and if price can break 69.50 and make it stick then there’s quite a bit of scope for further gains.

Oil.WTI spiked higher on the DOE release but by the time the H1 candle closed it was in the red. Price looks to remain pretty well supported and a break above 69.50 would negate the bearish H1 candle and could lead to a larger breakout. Source: xStation

Oil.WTI is close to its highest level in a month after the release and the market could be setting up an inverse head and shoulders formation. The neckline in this could be seen to be around 69.50 which, if broken and it plays out in a textbook fashion would target a symmetrical move to 75.00. A rally of 550 ticks. Source: xStation